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- Asia Market Entry Strategy for Japanese Consumer Finance Companies: The Case in Hong Kong, Taiwan, and Thailand
Asia Market Entry Strategy for Japanese Consumer Finance Companies: The Case in Hong Kong, Taiwan, and Thailand
Yoshiharu Kuwana J.F. Oberlin University
Toshio Kishimoto University of Toyama
This paper analyzes the trend of Asian market for Japanese consumer finance companies and problems of their entry strategies. To begin with, we surveyed the present state of consumer finance market in Taiwan, Hong Kong, and Thailand.
The credit card business was started by the foreign affiliate banks in Taiwan in 1985. Local banks came to do the credit business and the consumer finance achieved a peak in about 2000. As the card-holic problem rose to the surface and the cap interest rate has been reduced, the loan businesses have downsized. A Japanese company entered into auto loan business in Taiwan in 1991. After that, it started the credit business in cooperation with a local bank, but it withdrew because its profitability became worse with tightening of regulations. Though there are needs of the consumer finance and the credit facility data, the profit of consumer finance business is small because the regulation is served and much of loans are small scale in Taiwan.
For Hong Kong, the consumer finance business began earlier than other areas in East Asia. One Japanese company entered into Hong Kong in 1977. A lot of players have entered into the market after the enactment of the bank law in 1981. The competition is still severe though the share of the big companies have risen in recent years. There is possibility that companies enters into Chinese market while the Hong Kong market has been maturing.
The consumer finance market has developed through the financial liberalization in Thailand in 1990. However, the number of consumer finance companies are now limited because the entry regulation was introduced when Asian currency crisis happened. Tow Japanese companies have been doing business there, and one of them has collaborated with the local company to develop the business throughout Thailand. The other has been doing a steady business for a specific customer.
The analytical framework for the consumer finance company that enters into foreign market is examined based on these current states of three countries. First, three factors that decide scale of a local consumer finance market are considered. Three factors are an understanding of consumer finances by customers (citizens), a liberalization level of consumer finance, and business ability of consumer finance company.
The market scale is decided from these levels. Our research found that the market scale was not corresponding to the scale of the consumer finance business. This paper also shows the concept of the relationships of power to influence the consumer finance business: government --- customer (citizen), customer (citizen) --- company, and government-company. It is a local market scale, and the relationships among government, customer (citizen) and company that decides the success or failure on the foreign market entry strategies for consumer finance companies.
